Indonesia May Scrap Price Approval Rule on Gas Negara (Update1)
(Adds official's comments in fourth paragraph.)
By Leony Aurora
Aug. 5 (Bloomberg) -- Indonesia's energy ministry may scrap a rule requiring PT
Perusahaan Gas Negara, the country's largest distributor of the fuel, to seek
its approval on pricing agreements with factories and utilities.
The government may also decide not to set a maximum price for the fuel, Evita
Legowo, director general of oil and gas at the ministry, said by telephone
today. The ministry plans to issue a regulation by the end of October, she said.
The ministry's plan marks a reversal from last year when the government
challenged Gas Negara's authority to increase prices by 10 percent to pass on
higher fuel costs to consumers. The government is now trying to ``smoothen''
the way for gas supply deals to encourage more use of the fuel as crude oil
soared to records this year.
``The prices should be determined by a business-to-business agreement,'' Evita
said.
The gas distributor climbed 2.4 percent to 2,175 rupiah at 2:48 p.m. in Jakarta
today, outperforming a 3 percent decline in the benchmark index.
Gas Negara and Luluk Sumiarso, formerly the director general of oil and gas at
the ministry, previously agreed on a maximum price of $11.4 per million British
thermal units. Evita replaced Luluk on July 18.
The Jakarta-based gas distributor, 55 percent owned by the government, was
granted permission to raise prices by 9.7 percent to an average of $5.5 per
million British thermal units on Aug. 1 last year. The increase was its third
in two years.